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Do people feel that making a request for determination of estate tax and discharge from personal liability under section 2204 does or does not significantly increase the chances that an estate tax return will be audited?
Just trying to get a feel for people's thoughts and experiences on this.
Thank you.
Richard Cassidy, CPA
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| The only feedback I've heard was a few years ago at the annual Feb. IRS meeting. IIRC, the IRS attorney said that it was not a factor. It may not make a difference anyway; it is my experience that the IRS issues "no change" letters well before nine months after filing, meaning that the classification process begins soon after filing. You might ask this question in person at the Feb. meeting.
John Jacobson
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| I had one 706 where the IRS totally ignored the request. When the statute had run, I called the San Francisco office (before we were filing in Cincinatti) and asked about it. They then sent a letter. I've heard before that attaching such a request doesn't cause an audit or speed up the process in any way. I only do it if the client specifically requests it.
Mary Kay Foss
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Mary Kay, do you mean the IRS tried to collect estate tax from the personal assets of the executor despite the Sec. 2204 request?
John Jacobson
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No, I mean that there was no contact from the IRS at all. Three years from the exteneded due date we called to request a closing letter.
Mary Kay Foss
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There technically is no prompt assessment period for estate taxes. How do I know? I was notified by an examiner at the IRS when I tried it. I then looked it up and discovered he was right. The audit period remains at three years for a 706.
I do believe however, that you can ask for a prompt assessment on gift tax returns and of course on individual and fiduciary income tax returns.
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